‘Food subsidies will continue until a permanent solution is reached’

ROBERTO AZEVÊDO, director-general, World Trade Organisation

NEW DELHI: With only a few weeks remaining for the conclusion of the Doha round to push global trade, WTO director-general Roberto Azevêdo tells HT in an email that the rift between the developed and developing nations on the issue of food subsidies still remains wide. Excerpts.

India is seeking a “balanced outcome” from the World Trade Organisation’s (WTO) tenth ministerial meeting in Nairobi, even as it is striving to get a permanent solution to the food security issue. What do you think about India’s stand on the Trade Facilitation Agreement (TFA)?

At our Bali ministerial conference in December 2013, ministers decided not to legally challenge the WTO compliance of food-stockholding programmes in developing countries. Members were instructed to find a permanent solution by December 31, 2015. In November last year, members clarified that if there was no agreement within the targeted timeframe, such eligible programmes in developing countries would remain unchallenged until such a permanent solution was found. Despite discussions, positions remain wide apart.

Ratification of the TFA by members has seen some delay…

The TFA will simplify global customs procedures, which can lead to a 14% cut in trade costs. Our economists project that implementation of the TFA by WTO members could lift global exports by $1 trillion annually.

We knew that it would take some time for the TFA ratifications to start coming in. Some of our members were able to accept the TFA through administrative decisions, but for many, parliamentary approval is required. We’re now starting to see these efforts bear fruit.

India is expected to lead the global economic engine in the coming years. What do you think India should do to help other economies grow along?

India is increasingly playing a leadership role on the global stage. I look forward to seeing this continue. I wouldn’t seek to offer any specific advice — however, WTO members carried out a trade policy review of India last year. The report noted India’s continued efforts to liberalise trade and steps to relax FDI restrictions in some sectors. These are positive developments which should boost growth. However, India’s import regime remains complex, especially its licensing and permit system. There are also structural bottlenecks such as delays in project approvals, ill-targeted subsidies, and weaknesses in transport and power infrastructure. Some of these bottlenecks are being addressed, which can help growth prospects.

WTO has lowered its estimate for world trade growth by 0.5% and 0.1% for 2015 and 2016, respectively. The reasons?

The downward revision is due to several factors that has weighed on the global economy, including falling import demand in China, Brazil and other emerging economies, falling oil prices and exchange rate fluctuations. For Asia in particular, we have seen a fall in intraregional trade. In fact, the strongest downward revision to the previous export forecast for 2015 was applied to Asia, where our estimate was lowered to 3.1% from 5.0% in April. So it would seem likely India will be affected, but to what extent we cannot yet say.

India’s continued efforts to liberalise trade and steps to relax FDI restrictions in some sectors are positive developments which should boost growth